SALES

CASE DIGEST
CASE NO. 8

ROMULO A. CORONEL v. CA, GR No. 103577, 1996-10-07

Facts:
The petition before us has its roots in a complaint for specific performance to compel herein petitioners
(except the last named, Catalina Balais Mabanag) to consummate the sale of a parcel of land with its
improvements located along Roosevelt Avenue in
Quezon City entered into by the parties sometime in January 1985 for the price of P1,240,000.00.
January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinafter referred to as Coronels)
executed a document entitled "Receipt of Down Payment" (Exh. "A") in favor of plaintiff Ramona Patricia
Alcaraz (hereinafter referred to as Ramona)... conditions appurtenant to the sale are the following:
1.       Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the
document aforestated;
2.       The Coronels will cause the transfer in their names of the title of the property registered in the name
of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment;
3.       Upon the transfer in their names of the subject property, the Coronels will execute the deed of
absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One
Hundred Ninety Thousand (P1,190,000.00)
Pesos.
plaintiff-appellee Concepcion D. Alcaraz (hereinafter referred to as Concepcion), mother of Ramona, paid
the down payment of Fifty Thousand (P50,000.00)... the property originally registered in the name of the
Coronel's father was transferred in their names... the Coronels sold the property covered by TCT No.
327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million
Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand
Coronels canceled and rescinded the contract (Exh. "A") with Ramona by depositing the down payment
paid by Concepcion in the bank in trust for Ramona Patricia Alcara
Catalina caused the annotation of a notice of adverse claim covering the same property with the Registry of
Deeds of Quezon Cit... the Coronels executed a Deed of Absolute Sale over the subject property in favor of
Catalina (... a new title over the subject property was issued in the name of Catalina under TCT No.
351582... judgment for specific performance is hereby rendered ordering defendant to execute in favor of
plaintiffs a deed of absolute sale covering that parcel of land embraced in and covered by Transfer
Certificate of Title No. 327403 (now TCT No. 331582) of the
Registry of Deeds for Quezon City, together with all the improvements... motion for reconsideration was
filed by petitioners before the new presiding judge of the Quezon City RTC but the same was denied by
Judge Estrella T. Estrada
Issues:
precise determination of the legal significance of the document entitled "Receipt of Down Payment" which
was offered in evidence by both parties.
Ruling:
We hold that the contract between the petitioner and the respondent was a contract to sell where the
ownership or title is retained by the seller and is not to pass until the full payment of the price, such
payment being a positive suspensive condition and... failure of which is not a breach, casual or serious, but
simply an event that prevented the obligation of the vendor to convey title from acquiring binding force.
the... contract entered into in the case at bar, the sellers were the ones who were unable to enter into a
contract of absolute sale by reason of the fact that the certificate of title to the property was still in the name
of their father.  It was the sellers in this case who, as... it were, had the impediment which prevented, so to
speak, the execution of an contract of absolute sale.
What is clearly established by the plain language of the subject document is that when the said "Receipt of
Down Payment" was prepared and signed by petitioners Romulo A. Coronel, et. al., the parties had agreed
to a conditional contract of sale, consummation of which is subject... only to the successful transfer of the
certificate of title from the name of petitioners' father, Constancio P. Coronel, to their names
Since the condition contemplated by the parties which is the issuance of a certificate of title in petitioner's
names was fulfilled on February 6, 1985, the respective obligations of the parties under the contract of sale
became mutually demandable, that is, petitioners, as... sellers, were obliged to present the transfer
certificate of title already in their names to private respondent Ramona P. Alcaraz, the buyer, and to
immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the
balance of the... purchase price amounting to P1,190,000.00.
Had petitioners-sellers not complied with this condition of first transferring the title to the property under
their names, there could be no perfected contract of sale.
the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where Article 1544
of the Civil Code will apply, to wit:
The record of the case shows that the Deed of Absolute Sale dated April 25, 1985 as proof of the second
contract of sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a
new certificate of title in the name of Catalina B. Mabanag on June
5, 1985.  Thus, the second paragraph of Article 1544 shall apply.
The above-cited provision on double sale presumes title or ownership to pass to the buyer, the exceptions
being:  (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should
there be no inscription by either of the two buyers, when... the second buyer, in good faith, acquires
possession of the property ahead of the first buyer.  Unless, the second buyer satisfies these requirements,
title or ownership will not transfer to him to the prejudice of the first buyer.
If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous
sale of the same property to a third party or that another person claims said property in a previous sale, the
registration will constitute a registration in bad faith and... will not confer upon him any right.
Principles:
In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer,
meaning, the prospective... seller does not as yet agree or consent to transfer ownership of the property
subject of the contract to sell until the happening of an event, which for present purposes we shall take as
the full payment of the purchase price.
What the seller agrees or obliges himself to... do is to fulfill his promise to sell the subject property when the
entire amount of the purchase price is delivered to him
Roque vs. Lapuz (96 SCRA 741 [1980])
We hold that the contract between the petitioner and the respondent was a contract to sell where the
ownership or title is retained by the seller and is not to pass until the full payment of the price, such
payment being a positive suspensive condition and... failure of which is not a breach, casual or serious, but
simply an event that prevented the obligation of the vendor to convey title from acquiring binding force.
A contract to sell may thus be defined as a bilateral contract whereby the prospective seller, while
expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer,
binds himself to sell the said property exclusively to the... prospective buyer upon fulfillment of the condition
agreed upon, that is, full payment of the purchase price.
A contract to sell... may not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition
In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the
purchase price, ownership will not automatically transfer to the buyer although the property may have been
previously delivered to him
In a conditional contract of sale, however, upon the fulfillment of the suspensive condition, the sale
becomes absolute and this will definitely affect the seller's title thereto.  In fact, if there had been previous
delivery of the subject property, the seller's ownership... or title to the property is automatically transferred
to the buyer such that, the seller will no longer have any title to transfer to any third person.
Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or
constructive... knowledge of such defect in the seller's title, or at least was charged with the obligation to
discover such defect, cannot be a registrant in good faith.  Such second buyer cannot defeat the first
buyer's title.  In case a title is issued to the second buyer, the... first buyer may seek reconveyance of the
property subject of the sale.
Art. 1544.  If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof to the person who presents the oldest title, provided there is good
faith.
The above-cited provision on double sale presumes title or ownership to pass to the buyer, the exceptions
being:  (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should
there be no inscription by either of the two buyers, when... the second buyer, in good faith, acquires
possession of the property ahead of the first buyer.  Unless, the second buyer satisfies these requirements,
title or ownership will not transfer to him to the prejudice of the first buyer.
In a case of double sale, what finds relevance and materiality is not whether or not the second buyer in
good faith but whether or not said second buyer registers such second sale in good faith, that is, without
knowledge of any defect in the title of the property sold.